https://theintercept.com/2019/01/21/ocasio-cortez-marginal-tax-rate/
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WITH ALEXANDRIA OCASIO-CORTEZ, AMERICANS FINALLY HAVE A POLITICIAN WHO AGREES WITH THEM ABOUT TAXES
Jon Schwarz
January 21 2019, 3:06 p.m.
Photo illustration: Soohee Cho/The Intercept
MUCH OF THE U.S. political system was flummoxed two weeks ago when a brand new 29-year-old congressperson made a seemingly radical proposal on “60 Minutes.”
Here’s what Rep. Alexandria Ocasio-Cortez, D-N.Y., said that wound everyone up: The U.S. should tax income over $10 million per year at a top rate of 60 or 70 percent.
Republicans responded by shamelessly lying about what this meant, pretending that Ocasio-Cortez was advocating a tax rate of 70 percent on all income. Some older Democrats, such as House Majority Leader Steny Hoyer and former Senate Majority Leader Harry Reid, adopted the standard Democratic tactic of cowering in fear before a deceptive Republican onslaught, like abused dogs.
The hullabaloo was understandable: Ocasio-Cortez’s forthright advocacy demonstrated that American politics, against the odds, can sometimes be about what Americans want. After the “60 Minutes” episode aired, The Hill commissioned a poll that found that 59 percent of registered voters support raising the top marginal tax rate to 70 percent. The idea, The Hill wrote, even receives “a surprising amount of support among Republican voters. … 45 percent of GOP voters say they favor it.”
However, the only surprising thing about this Republican support was that The Hill found it surprising. For the past 40 years, polls have uniformly shown that there is essentially no constituency for cutting taxes on the wealthiest Americans or corporations — and a huge constituency for raising them.
Two prominent political scientists, Martin Gilens at the University of California, Los Angeles and Benjamin Page at Northwestern University, have carefully studied the U.S. political system and demonstrated with charts and tables what most of us believe intuitively: If you don’t have money, you don’t matter. Or as Gilens and Page put it, “Not only do ordinary citizens not have uniquely substantial power over policy decisions; they have little or no independent influence on policy at all. By contrast, economic elites are estimated to have a quite substantial, highly significant, independent impact on policy.”
The last 40 years of U.S. tax policy have been the most striking demonstration imaginable of this assertion. Americans have never, in living memory, been averse to higher taxes on the rich. Nonetheless, the top marginal tax rate for the federal income tax plunged during the Reagan administration, from 70 percent to 28 percent, and has since only inched back up to 37 percent.
Taxes1b-1547848630Chart: Moiz Syed/The Intercept
Republicans, many Democrats, and well-paid television journalists have browbeaten Americans for years with tales of how raising taxes on the wealthy would obliterate the U.S. economy. But the historical fact is that the economy has thrived with top rates of 80 percent or higher. In fact, as tax rates have come down, so has the rate of economic growth.
The top marginal corporate tax rate likewise dropped precipitously under Reagan, from 46 percent to 34 percent. Thanks to Trump’s 2017 tax bill, it’s now down to 21 percent.